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Tuesday, August 29, 2006

Interesting Reaction to FOMC Minutes

The minutes from the last FOMC meeting were just released, and the market experience a volatile reaction. The initial move was lower, as the market tested today's lows, but then it quickly reversed higher and snapped back all the way to break-even for the day.

Here is a quick summary of the comments:

FOMC says growth, inflation pressures may ease gradually

Lacker was the lone dissenter

August rate decision was a close call

Below potential growth may last for six quarters

Past tightening may hold growth below potential

Limited risk in deferring necessary tightening

Considerable uncertainty about housing outlook

Upside risk to inflation remains significant

From these comments, it appears the Fed was still focused on inflation and implying that they are merely pausing while awaiting more data. I believe that inflation has peaked and that they will not raise rates again.'

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About Me

Jordan Kahn, CFA is the Chief Investment Officer of KAM Advisors, in Beverly Hills, CA.
He is a frequent market commentator for numerous investment publications, and has appeared on CNBC and KNBC-Los Angeles. He is a regular columnist for RealMoney.com and has also been featured in TheStreet.com, Street Insight, Technology Investor, and Barron’s.